Slow re-gasification rate of LNG: PSO to face demurrages of $9,31,750 by month-end

ISLAMABAD: Pakistan State Oil (PSO) in its latest communication to Petroleum Division feared that state owed oil marketing company (OMC) may be exposed to expected demurrages and boil-off expenses amounting to $9,31,750 as the gas pipeline pack has increased to alarming level of over 5 billion cubic feet on account of which regasification rate of LNG has massively slowed down.

Pipeline has the capacity to store maximum RLNG of 4.6 bcf in it, but at the moment it is hovering between 4.8 to over 5 bcf. Crossing the mark of 4.6 bcf can endanger the existence of the pipeline, but it has alarmingly crossed over 5 bcf, which has raised the eyebrows of many top officials. In the letter written on November 6, 2019 to Special Assistant to PM on Petroleum, Secretary petroleum, DG Gas, GD LGs, MDs of Sui Southern and Sui Northern of which copy is available with The News, PSO mentioned that Sui Northern has drastically reduced the take-off of RLNG in the system from LNG terminal-1 owing to which the line pack has touched over 5 billion cubic feet and it has resulted in massive slowdown of regasification of LNG rate. Because of this every fact, the ships carrying LNG which are in the line will not be able to offload on time. And this will expose the PSO to huge demurrages amounting to $9,31,750 by end of the current month. In the letter, PSO said that Sui Northern needs to divert LNG to other sectors of economy so that the line pack could be reduced. PSO also emphasised saying that it will not be responsible for the expenses to be incurred on demurrages and it will be on account of SNGPL as PSO is importing the LNG purely on their behalf Sui Northern. The RLNG consumption data shows that power sector has reduced the intake of RLNG to 130 mmcfd against its demand of 550 mmcfd and more importantly the domestic sector is not using it as it required. So at the moment, export industry, CNG sector, fertilizer sector is using the gas which is why the line pack has increased to over 5 bcf and because of this very reason the regasification has remarkably slowed down. This has shined the aspects of invoking the clause of take or pay charges. However, demurrages will certainly rise owing to slow off-loading of LNG vessels by end of the current month of November. However, Sui Northern in its letter also written on November 6 to DG Gas of which copy is also available with this correspondent argued saying that the less consumption of RLNG in domestic sector and power sector, has resulted in increase in system pack which has reached alarming level of over 5 bcf. It also says that high system pack has also adversely affected scheduled re-gas rates and SNGPL has not been able to receive RLNG as per scheduled re-gas rates. SNGPL has asked for intervention in the matter so that financial implications on upcoming cargoes of LNG are averted and smooth sailing of RLNG supply chain is ensured.